Born in Rome, Leone was the son of the cinema pioneer Vincenzo Leone (known as director Roberto Roberti or Leone Roberto Roberti) and the silent film actress Edvige Valcarenghi (Bice Waleran). During his schooldays, Leone was a classmate of his later musical collaborator Ennio Morricone for a time. After watching his father work on film sets, Leone began his own career in the film industry at the age of 18 after dropping out of law studies at the university.

Working in Italian cinematography, he began as an assistant to Vittorio de Sica during the movie The Bicycle Thief in 1948. Leone began writing screenplays during the 1950s, primarily for the 'sword and sandal' (a.k.a. 'peplum') historical epics, popular at the time. He also worked as an assistant director on several large-scale international productions shot at the Cinecittà Studios in Rome, notably Quo Vadis (1951) and Ben-Hur (1959), financially backed by the American studios.

When director Mario Bonnard fell ill during the production of the 1959 Italian epic The Last Days of Pompeii (Gli Ultimi Giorni di Pompei), starring Steve Reeves, Leone was asked to step in and complete the film. As a result, when the time came to make his solo directorial debut with The Colossus of Rhodes (Il Colosso di Rodi, 1961), Leone was well equipped to produce low-budget films which looked like larger-budget Hollywood movies.

In the mid-1960s, historical epics fell out of favor with audiences, but Leone had shifted his attention to a subgenre which came to be known as the "Spaghetti Western", owing its origin to the American Western. His film A Fistful of Dollars (Per un Pugno di Dollari, 1964) was based upon Akira Kurosawa's Edo-era samurai adventure Yojimbo (1961). Leone's film elicited a legal challenge from the Japanese director, though Kurosawa's film was in turn probably based on the 1929 Dashiell Hammett novel, Red Harvest.A Fistful of Dollars is also notable for establishing Clint Eastwood as a star. Until that time Eastwood had been an American television actor with few credited film roles.

The look of A Fistful of Dollars was established by its Spanish locations, which presented a violent and morally complex vision of the American Old West. The film paid tribute to traditional American western films, but significantly departed from them in storyline, plot, characterization and mood. Leone gains credit for one great breakthrough in the western genre still followed today: in traditional western films, many heroes and villains looked alike as if they had just stepped out of a fashion magazine, with clearly drawn moral opposites, even down to the hero wearing a white hat and the villain wearing a black hat (except for the most successful of the 'traditional western cowboys' - Hopalong Cassidy, who wore a black outfit upon a pale horse). Leone's characters were, in contrast, more 'realistic' and complex: usually 'lone wolves' in their behaviour; they rarely shaved, looked dirty and sweated profusely, and there was a strong suggestion of criminal behaviour. The characters were also morally ambiguous by appearing generously compassionate, or nakedly and brutally self-serving, as the situation demanded. Relationships revolved around power and retributions were emotion-driven rather than conscience-driven. Some critics have noted the irony of an Italian director who could not speak English, and had never even visited the United States, let alone the American Old West, almost single-handedly redefining the typical vision of the American cowboy. According to Christopher Frayling's book Something to do with Death, Leone knew a great deal about the American Old West. It fascinated him as a child, which carried into his adulthood and his films.

Based on the success of The Man with No Name trilogy, Leone was invited to the United States in 1967 to direct Once Upon a Time in the West (C'Era una Volta il West) for Paramount Pictures. The film was shot mostly in Almería, Spain and Cinecittà in Rome. It was also briefly shot in Monument Valley, Utah. The film starred Charles Bronson, Henry Fonda, Jason Robards and Claudia Cardinale. Once Upon a Time in the West emerged as a long, violent, dreamlike meditation upon the mythology of the American Old West, with many stylistic references to iconic western films. Audience tension is maintained throughout this nearly three-hour film by concealing both the hero's identity and his unpredictable motivation until the final predictable shootout scene. Perhaps unsurpassed as a retribution drama, the film's script was written by Leone and his longtime friend and collaborator Sergio Donati, from a story by Bernardo Bertolucci and Dario Argento, both of whom went on to have significant careers as directors. Before its release, however, it was ruthlessly edited by Paramount, which perhaps contributed to its low box-office results in the United States. Nevertheless, it was a huge hit in Europe, grossing nearly three times its $5 million budget among French audiences, and highly praised amongst North American film students. It has come to be regarded by many as Leone's best film.[3][4]

Leone continued to produce, and on occasion, step in to reshoot scenes in other films. One of these films was My Name Is Nobody (1973) by Tonino Valerii, a comedy western film that poked fun at the spaghetti western genre. It starred Henry Fonda as an old gunslinger facing a final confrontation after the death of his brother. Terence Hill also starred in the film as the young stranger who helps Fonda leave the dying West with style.[citation needed]

Leone turned down the opportunity to direct The Godfather, in favor of working on another gangster story he had conceived earlier. He devoted ten years to this project, based on the novel The Hoods by former mobster Harry Grey, which focused on a quartet of New York CityJewishgangsters of the 1920s and 1930s who had been friends since childhood. The four-hour finished film, Once Upon a Time in America (1984), featured Robert De Niro and James Woods. It was a meditation on another aspect of popular American mythology, the role of greed and violence and their uneasy coexistence with the meaning of ethnicity and friendship. Feeling the final cut was too long, Warner Bros. recut it drastically for the American market, abandoning its flashback structure for a linear narrative. Lasting just over two hours, the recut version shown in North America received much criticism and flopped. The original version, released in the rest of the world, achieved somewhat better box office returns and a mixed critical response. When the original version of the film was released on home video in the US, it finally gained major critical acclaim, with some critics hailing the film as a masterpiece.

According to biographer Sir Christopher Frayling, Leone was deeply hurt by the studio-imposed editing and poor commercial reception of Once Upon a Time in America in North America. It would be his last film.

In his later years, Leone had a falling out of sorts with actor Clint Eastwood. When Leone directed Once Upon a Time in America, he commented that Robert De Niro was a real actor, unlike Eastwood. This may have been in response to Eastwood declining to play the Irish police detective in the aforementioned film, according to one biography. However, the two made amends and reconciled before Leone's death. In 1992, Eastwood directed Unforgiven, a revisionist western drama for which he won an Oscar for best director, as well as Best Picture. Leone was one of the two directors whom Eastwood dedicated his award to (the other was Don Siegel) and the film contains the dedication "To Sergio & Don" before the end credits roll.

A treatment for an "Americanized" western was written by Leone, Luca Morsella, and Fabio Toncelli. It is speculated to have been Leone's last western and was to have starred Mickey Rourke and Richard Gere as the two main leads. Set during the height of the American Civil War, the story focused on a Union drafter, Mike Kutcher from Georgia, whose job is to enroll men into the Union army. The other is Richard Burns, a Southern shady businessman transplanted to the North after a successful heist with his ex-lover and partner, Mary. Searching for the buried treasure left behind in an unmarked grave outside Atlanta in “A Place Only Mary Knows”. Joined by a freed slave and an Italian immigrant, Francesco, who arrives via the port of Boston, they try desperately to avoid the battles of the ongoing war between the states.

The film was to have been a homage to classic writers from literature such as — Edgar Lee Masters (Spoon River Anthology), Ambrose Bierce (An Occurrence at Owl Creek Bridge), Mark Twain (A Military Campaign that Failed), Stephen Crane (The Red Badge of Courage), and Margaret Mitchell (Gone with the Wind), of whose novel he had wanted to film a remake. Although the written treatment never got turned into a full screenplay, Leone's son Andrea had it published in a June 2004 issue of the Italian cinema magazine Ciak. It is unsure if the treatment's publication will ever lead to a full production in America or Italy.

While finishing work on Once Upon a Time in America in 1982, Leone was impressed with Harrison Salisbury's non-fiction book The 900 Days: The Siege of Leningrad, and he planned on adapting the book as a war epic. Although no formal script had been completed or leaked, Leone came up with the opening scene and basic plot. According to the documentary Once Upon a Time, Sergio Leone, the film opened in medias res as the camera goes from focusing on a Russian hiding from the Nazis' artillery fire to panning hundreds of feet away to show the German Panzer divisions approaching the walls of the city. The plot was to focus on an American photographer on assignment (whom Leone wanted to be played by Robert De Niro) becoming trapped in Russia as the German Luftwaffe begin to bombard the city. Throughout the course of the film, he becomes romantically involved with a Russian woman, whom he later impregnates, as they attempt to survive the prolonged siege and the secret police, because relationships with foreigners are forbidden. According to Leone, "In the end, the cameraman dies on the day of the liberation of the city, when he is currently filming the surrender of the Germans. And the girl is aware of his death by chance seeing a movie news: the camera sees it explode under a shell .... "[7]

By 1989, Leone set the film's budget at $100 million, and had secured half of that amount in financing from independent backers from the Soviet Union. He had convinced Ennio Morricone to compose the film score, and Tonino Delli Colli was tapped to be the cinematographer. Shooting was scheduled to begin sometime in 1990. The project was cancelled when Leone died two days before he was to officially sign on for the film. Alex Cox hoped to replace Leone as director, but was unable to secure the remaining $50 million required to produce the film.[8]

According to Frayling's biography of Leone, Something to Do with Death, he envisioned a contemporary adaptation of Cervantes' 17th century novel Don Quixote with Clint Eastwood in the title role and Eli Wallach as Sancho Panza.[9] He had discussed doing the project throughout the 1960s-1970s, and he started seriously considering it towards the end of his life.[10]

In 1987, Sergio Leone contacted his old collaborators Sergio Donati and Fulvio Morsella, pitching an idea for a TV miniseries about a Colt revolver that passed from owner to owner throughout the Old West, similar to Anthony Mann's film Winchester '73 (1950). Donati indicated that Leone was interested in a more revisionist take on the genre than his earlier works, wanting to show the Old West "like it really was." Leone abandoned this project in favor of A Place Only Mary Knows, though Donati wrote a treatment and the project remained in gestation for years after Leone's death.[11]

Leone was a fan of Louis-Ferdinand Céline's novel Journey to the End of the Night and was considering a film adaptation in the late 1960s; he incorporated elements of the story into The Good, the Bad and the Ugly and Duck, You Sucker! but his idea of adapting the novel itself never got past the planning stages.

Leone also started writing a screenplay based on Lee Falk's The Phantom, and scouted locations for the project. Despite this, he never got to make a movie based on the comic book hero. He declared he would have liked to follow his Phantom project with a movie based on another Falk-created character, Mandrake the Magician.[12]

Leone was an early choice to direct Flash Gordon (1980). Leone was a fan of the original Alex Raymond comic strip, but turned down the film because the script did not resemble Raymond's work.[13]